Markets Update — Cross Currents: 1st Oct 21

At the risk of stating the obvious, the markets that ATEC is watching remains clear as mud.

With the macro narrative now having shifted towards ‘China slowdown’ and ‘stagflation’, the level of skittishness amongst players is no joking matter.

The energy shortages now hitting China (amongst many others) now risks prolonging past winter, and will weigh on growth globally. The message from our technical framework also offers mixed messages at present, with few clear set-ups to cling to.

Nevertheless, a lack of clarity is in itself a message, and here, we will lay out a few things worth following/noting.

Source: Bloomberg

Firstly, it was clear that our optimism towards the metal in mid-September was wrong. A breakout of the correction channel in the middle of the month suggested to us that its corrective wave was done and that the market was ready to embark on a new uptrend.

This view clearly has changed. We now think the metal is still in the midst of a more complex corrective wave, which could stretch on for weeks, in spite of the low inventory data all round.

Source: Bloomberg

Being the bell-weather of tech/semiconductors, TSMC’s inability to break out in September, as well as subsequent price action, tells us that the industry/sector has still yet to fully discount growth disappointment in the quarters ahead.

Source: Bloomberg

Perhaps unsurprising, HSCEI’s 30% decline from its peak has returned it pretty much to Covid lows. This is ground zero when it comes to the slowdown narrative, regulations drag, real estate implosion, as well energy crunch. ATEC will note, however, that this market is also where the corrective wave counts (according to us) are the most mature to the downside and hence, is worth watching for hints of change. This is of course, very preliminary.

Source: Bloomberg

That the recent rise in US 10 year bond yields did not suggest a reflationary backdrop, but more of disorderly positioning dislocation, which was also evidenced by the rally in the DXY (dollar) index. For Asia to truly gain traction, we do need to see the ADXY resume a recovery trend.

In all, there is no point mincing words when describing what the evidence is showing us. None of the markets/signals are bullish, hence ATEC continues to stay light and watch… for change.

Good luck out there.



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Investing research and thoughts from an Upside user and Portfolio Manager named ATEC, based in Singapore. learn more at